Executive Q&A: Riverstone Residential CEO Talks Shop
- Nov 03, 2008
Dallas-based Riverstone Residential Group, already one of the nation’s largest privately owned third-party residential real estate management companies, is getting even larger, growing by leaps and bounds with such moves as its April acquisition of Seattle-based HSC Real Estate Inc. And as Riverstone CEO Christy Freeland (pictured) told CPN, size really does matter. CPN: While the housing crisis has been sustaining the multi-family market, no sector of real estate is fully escaping the economic downturn and the financial crisis. How have these issues impacted the business of property management? Freeland: Property owners want to keep revenue up as the economy slows down, so they’re recognizing that there’s a difference between a local management company that may not have the same system and purchasing platform as a large company. And they want a company that has expertise in marketing. CPN: In July, Riverstone expanded its portfolio with the addition of 14 new apartment communities accounting for nearly 2,400 units spanning eight states across the country. Also, you have over 5,000 associates across the country. Is bigger really better? Freeland: We’ve also acquired six companies in the last 20 months. We’re not bigger just to be bigger; we want to be bigger for the efficiencies. We’re using our size to create efficiency for our owners. With growth, our buying power is better and the efficiencies of scale are greater. And we have resource expertise, which involves a combination of leasing, maintenance and hiring management; we have expertise in all those areas. But at the end of the day, it’s all about the people element, the customer service ethic. Now, a lot of owners are coming to us because along with the purchasing power, we have the ability to hire the best people in cities. We have a national platform, but we are in local markets. CPN: Aside from the general increase in demand for apartments as a result of the single-family housing market meltdown, what is the current state of the apartment market, warts and all–if there are any warts? Freeland: There is a combination of things going on. People have lost confidence in the economy, and when that happens, people hold tight, they stay where they are. If you’re buying, your credit has got to be golden, so people are staying longer in apartments. And people who can afford to buy say to themselves, ‘Do I buy when the value could go down or do I stay put?’ But there’s also the issue of household formation, which ends up driving the rental apartment market. Usually, that group is age 18 to 25, but now they’re spending more time in college. Baby boomers love their kids, so they’re staying home longer. So, we’ll see some tightening. Some rents will hold steady. People will stay where they are but not as many, such as those who would fall into the household formation category, are looking. But ultimately, multi-family is probably the strongest sector out there. We did not overbuild. It’s been difficult to get money to build for the last year or so, so there’s no oversupply; supply and demand are in really good equilibrium. CPN: Are there any markets that Riverstone has its eyes on; markets you have not yet penetrated? Freeland: Next year, we’re going for organic growth; growth within markets we’re already in and with clients we already have. It’s not all about bigger. We have so many markets covered and so many people in the field–it allows us to be the best of both worlds.